‘Race To The Bottom’
Foreclosure defense attorneys greeted the news favorably. They have complained bitterly about the quality of Fannie and Freddie attorneys and placed some of the blame for documentation problems on the agencies.
“It’s high time somebody does something,” said Matt Weidner of the St. Petersburg-based Foreclosure Law Offices of Matt Weidner. “The centralization of this poor legal work was a big part of the problem. The race to the bottom on ethics and legal accuracy and the profit model is a big part of the overall problem.”
Already, he said he has seen Fannie Mae and Freddie Mac pulling back from cases and more involvement by lenders and services.
“By decentralizing and putting the cases in the hands of lawyers that have decision-making power and communication with their clients, the banks, we are seeing actual decision-making. You can actually get someone on the phone.”
Banks with Fannie and Freddie files can now farm them out to smaller law firms “with better models,” Weidner said. Foreclosure law firms say it will take time to see the effects of a policy change by the Federal Housing Finance Agency that phased out lists of pre-approved law firms allowed to handle foreclosure cases for Fannie Mae and Freddie Mac.